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Stop Loss : Set Low or Set High?

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Avatar for Jane
Written by   1519
10 months ago

December 5, 2020

After a few days of conducting demo Margin Trading on Bityard, it gives me more ideas and techniques about trading - proper entering and exiting, and setting a stop-loss order. A NOOB in trading truly needs more practice and knowledge before going live trade to prevent from having big losses.

And just yesterday, I saw the tweet of Bityard stating that their SL is up to 90%. At that moment, I realized the real technique of setting stop-loss orders to achieve more profit in trading. So last night before I went to sleep, I've conducted a demo applying 90% SL at an initial margin of $100. I saw that the BCH price was going down, so I chose the short trade (open it at $290.87 and the target price was $285). Here's the result when I checked it this morning. I have gained 40.36% profit from my $100 initial margin.

So what's the catch?

Ever since I started demo trading, I always set my SL at 5% because I thought it will prevent me from getting big losses, but after my latest demo, I've realized that it is actually not the best strategy. Why? You will know the reason in this article.

First, what is Stop Loss?

A simple definition of Stop Loss Order is, it is set to limit a trader's loss on a security position.

For example (a trade with $100 initial margin)

Let's say you purchased BCH at the target price of $280 then you set the stop-loss at 5% (that is a $5 possible loss of your $100 initial margin). If the price goes below $280, your trade will then be successful.
However, if it suddenly goes up to $308 which is 10% from your opening price without your notice, your trade will then be automatically closed losing $5 (5%) of your initial margin since you set the stop-loss at 5%.

So here's the difference between 5% SL and 90% SL.

Take my demo with 90% Stop Loss order as an example: (check the photo above)

I purchased BCH at $285 with the opening price of $290.87 and set the stop-loss at 90%. (Initial Margin was $100 and Initial Leverage was 20x). It reached my target price so I gained 40.36% from my Initial Margin and that is $40.36 profit.

My goal was to hit the price of $285 that is why I set 90% SL. As you can see, there is only a $5.87 difference between my opening price and my target price. So there is a big chance that it will be able to reach my target price as I saw the market was bloody red.

If you are confused how it becomes $40.36?

(Simply because I have set my TP (Take Profit) to 40.36% which $285)

Or you can compute it this way too. Just get the difference of $290.87-$285 which is $5.87 then multiply it with the 6.8759 quantity.

5.87 x 6.8759 = 40.36

Opening price - Closing price x (Quantity) = Profit

Volume ÷ Opening price = Quantity

Initial Margin x Initial Leverage = Volume

(I used a calculator for this Math thingy 😅)

Don't make yourself confused, Bityard trading system will automatically compute it for you. Just enter your target price and stop-loss percentage 🤣.

When you set a higher SL order, you still have a chance to reach your target price. However, if you set your SL at only 5%, you will immediately lose your trade once the price reaches the 5% SL order. And if you set 5% SL and lose repeatedly, it will add over time.

TAKE NOTE:

If your SL is set too high, there is also a high risk of losing your trade once it goes against your prediction. To prevent this from happening, always monitor your trade if you set a high SL.

Do not set a target price that is impossible to reach. And do not be too greedy, if you think you've gain enough, close your trade immediately and just open a new trade if you want to earn more.

The market is so volatile, we don't know when it will go up, and when it will go down. And it won't go along with your prediction all the time unless you're a professional trader already.

But if you do not want to set a Stop Loss order, you can have a Limit order which aims to profit from the current trends. A crypto trader will only set a Stop Loss order to limit their potential losses to no more than they can afford to lose.


Advantage of Stop Loss Order:

The advantage of a stop-loss order is you do not need to monitor your trades from time to time. This is especially handy when you are busy at work, on a vacation, or don't have enough time to closely monitor your trade and the market.

Disadvantage of Stop Loss Order:

The disadvantage is that the target price could be activated by a short-term fluctuation in a crypto’s price. It is not a good strategy to set a 5% SL if the asset has a history of fluctuating 10% or more in a day or a week. You will more likely to lose your trade.

The key is to set a Stop Loss percentage that will go along with the fluctuations of your traded asset while preventing as much downside risk as possible.


Stop-loss can indeed be misleading for new traders especially if they do not understand well how the market behaves.

When choosing a stop-loss order, a new trader should always consider the risk, as well as the significance of the crypto asset to their portfolio. They should also be able to predict the behavior of the market. It is not always a must to use a Stop Loss, it is just a tool based on how you analyze the market. The success of Stop Loss only depends on how your analysis is carried out.

I am not an expert in this matter so I am not advising you to copy this strategy. Always DYOR (do your own research) and if you are a new trader, you can conduct demo trading to know more ideas and strategies. And most importantly, do not ever go live trading without enough knowledge on effective trading strategies.

If you want to try demo margin trading on Bityard, you can sign up using this link https://m.bityard.com/?ru=sypznM. You can also mine for free their native token BYD which can be used in trading and other transaction fee.

Thanks for reading @Jane

Lead image from tradesanta.com

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Avatar for Jane
Written by   1519
10 months ago
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Comments

Excellent content... I never wanted to do that type of trading, honestly, it's more like gambling to me. I like to buy coins, you know... Own them and sell when I want if I want. But, you explained this thing better than anyone before and I used to read a lot about SL x TP trading. Good job and have a good life!

$ 0.01
10 months ago

I don't live trade yet... Its just a demo

$ 0.00
10 months ago

You are ready to take a few trades... You must feel feelings making real trades and back to demo acc. Just to know how it works in your head 😎

$ 0.00
10 months ago

Not..just lucky that the market go along with my prediction 😅

$ 0.00
10 months ago

I think I have to wake up first 😅 I'll get back on this one. I need this to learn.

$ 0.00
10 months ago

Stop loss depends on the spread before it can apply to strategy, looks like you have 0 spread so your risk ratio is .9/1 or 90% loss / 10% profit,

$ 0.00
10 months ago

Can i also just save this and read it again when i have enough braincells to process the numbers? ;;-;;

$ 0.00
10 months ago

Lol..sure

$ 0.00
10 months ago

Nanonood po ba kayo ng videos sa YouTube? Baka po may marerecommend kayong vlogger na pwedeng mapanood. There are terminologies that I'm not familiar and K want to know more about them.

$ 0.00
10 months ago

Minsan lng..my mga pinoy vloggers sa youtube pwd mo isearch pra mdali magets

$ 0.00
10 months ago

Yup okay po salamat❤ Nakakalat na po lahat ng spammers tingnan n'yo po mga comments negative na yung downvotes😞

$ 0.00
10 months ago

Stop Loss or even take profit is depend on your leverage and method of trades. some strategy use 10-25% TP with no SL in 100x above due to counter the whale SL hunt strategy, while in 50x below leverage it was use SL without TP, some strategy is set depend in method like if your scalper then put average or max SL with high leverage with low TP. while if your swinger then stick in normal set but if your heavy trader you should put some effort to get those set in effective way from your schedule

$ 0.00
10 months ago

Welcome back here

$ 0.00
10 months ago

hehe yeah welcome back to me lol hahaha

$ 0.00
10 months ago

This is why I prefer Spot trading than Margin and Futures trading. Although it gives a higher reward, the risk is higher too as your money can be liquidated if you entered at the wrong price. But great job here. You might earn a lot of money once you go live trading. 😁

$ 0.00
10 months ago

I hope so. haha..am not a risk taker. So if i go live, i will start at a small amount. 😅😅 i like spot trading too. But SL is just an option.. .you can just choose limit order.

$ 0.00
10 months ago

Good luck sa live trading. Haha! Kaya mo na yan. Di ka naman na noob sa trading. Papuntang pro ka na yata. Hahaha 😂

$ 0.00
10 months ago

Hndi rn.. aralin ko pa ang candlestick

$ 0.00
10 months ago

Anyway, app ba yan o site lang? Try ko nga din mag'Demo. Hahahaha

$ 0.00
10 months ago

https://m.bityard.com/?ru=sypznM

My free mining dn at up to 60% referral commission

$ 0.00
10 months ago

site lng.. Wait attach ko link jan..

$ 0.00
10 months ago

Sige. Try ko pag di ako busy. Hahaha Thanks. Balitaan mo kami pag nag'live ka na. 😁

$ 0.00
10 months ago

Nagdadalawang isip pa ako.. 🤣🤣

$ 0.00
10 months ago

If your stop lose is lower then the risk is not that much. It's always like the higher the stop loss the higher the risk.. Stop loss will be your fund saver 🤣🤣

$ 0.00
10 months ago

Hahaha! Tatry ko din mag'demo sa Margin trading kapag may time na ako. Maganda kitaan sa margin at futures. Kaso parang gamble to eh. Huhulaan mo kung tataas ba o bababa ung price. 😂

$ 0.00
10 months ago

Yes, in short it's gambling nmn talaga hahaha because you are predicting the market movements. So dapat alam natin ginagawa natin bago sumabak sa ganyan 🤣

$ 0.00
10 months ago

Oo kaya daming aaralin jan. Technical and fundamental analysis. 😂 Kaya bilib ako sa mga newbie sa Binance tapos sabak agad sa Futures trading eh. 😂 Gusto ko din sana itry kaso di ako risk-taker. 😂

$ 0.00
10 months ago

hahaha dami ko nga nabasa na ganon tapos sunog kase di alam ang ginagawa 🤣

$ 0.00
10 months ago

Wow. this articles proves that you already learned and still learning about trading. It shows how serious you are in learning trading crypto currencies especially BCH.

$ 0.00
10 months ago

Sana nga. Haha..it is just a demo. they said live trading is quite different.. But i will try tomorrow

$ 0.00
10 months ago

Good luck :)

$ 0.00
10 months ago

Congrats po on your earning, hopefully soon, i can be able to do like this po as i want to learn this kind of thing din po, if i got lucky n was able to get the free on sg po, subukan q po dun ung trade though i will still need your guidance po dun

$ 0.00
10 months ago

Demo lng yan.. Haha.. Bukad itry ko maglive trade kahit $10 lng 🤣🤣

$ 0.00
10 months ago

Gnun po ba, congrats n good luck po, sna po mkpg earn din po kau bukas kpag nglive trade po kau :)

$ 0.00
10 months ago

Maliit cguro..haha.. $10 lng itry ko

$ 0.00
10 months ago

Opo

$ 0.00
10 months ago

Hail to the master of noob 😆 You are doing good, I wish you more success on your trading journey or shall I say learnings if you are still not into live trading. I also did it last night my gains was 299.9% with a margin of 150 while leverage is 30x when I checked in morning the trade goes successful 🤣🤣 if it was real money I would be rejoicing by now 🤣

$ 0.00
10 months ago

Aba. Ikaw ang mas master 🤣🤣 anong crypto yan? Galing ng prediction mo.. Itry ko taasan ang leverage

$ 0.00
10 months ago

XRP I buy it short at 0.62 and closing it at 0.58 and my prediction is right 😆 the gain is $449 and I was like wow! wtf! lol.

$ 0.00
10 months ago

Wow.. . kung real yun magpapa giveaway ka cguro 🤣🤣 but they said the livevtrading is quite different.. So kelan natin itatry? 😂😂

$ 0.00
10 months ago

Oo malamang namalato na ako hahaha. Yeah, it's quite different a lot. I still have to watch the basics of reading the chart before I go live trading with leverage because you know it's very risky 😆 But sooner I will try. It's just a matter of guts when you going for live trading and of course knowledge about it. I can't risk a lot this time so I have to make sure of what I am doing hahaha.

$ 0.00
10 months ago

Me too.. Still need to know more bout charts and how to read that candlestick thingy 😅 am not a risk taker..if ever mag try ako, sa maliit na amount lng..

$ 0.00
10 months ago

Yeah, good luck to us I hope we will learn sooner 😊

$ 0.00
10 months ago

I don't fancy trading cryptocurrencies, I prefer staking to avoid stress and heart break due to losses. I have tried all I can to learn trading on binance, it's not easy at all and not for a busy person like me.

$ 0.00
10 months ago

Am busy at work too 😁😁 but i need to level up to gain more profit 😁😁 i only get small interest on staking

$ 0.00
10 months ago

There's always a quotation I can relay to you “Trading is not for all” I think I've read in on Binance 😆

$ 0.00
10 months ago

While reading your article, my minions inside my head were rallying about what was I reading, lol. Di talaga magsink in sa akin yung binabasa ko.😅😂

$ 0.00
10 months ago

Dahil ba sa wrong grommorrz 😒🤣🤣

$ 0.00
10 months ago

Hahaha,,opkors not. Di ko lang talaga magets ang about sa trading😅

$ 0.00
10 months ago

Awts... Magegets mo rn yan..more basa 😁😁🤣

$ 0.00
10 months ago

Hahahah, sana nga.

$ 0.00
10 months ago